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Custom Choice student loans review: Great interest rates and a balance reduction after you graduate

Custom Choice logo on orange background with gold coins
Custom Choice offers great interest rates on its graduate and undergraduate student loans.

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Pros and cons of Custom Choice student loans

Pros Cons

 

  • No origination fee, prepayment penalty, or late fee

  • Low minimum loan amount

  • Great loan interest rates

  • Customer support available by phone, email, and regular mail

  • Loan balance reduction after graduation

 

  • Good rates all around, but rates on graduate loans are more competitive than on undergraduate loans
  • No mobile app

Custom Choice undergraduate student loans

Custom Choice Undergraduate Student Loans has both variable-rate and fixed-rate undergraduate loans, and the interest rates on these loans are comparable to or lower than competing lenders’ rates. 

A special feature Custom Choice offers is a 2% reduction of your loan’s principal after you graduate. This may not seem like much, but will save you some on the overall cost of your loan. 

Custom Choice graduate student loans

Custom Choice Graduate Student Loans graduate student loans have the same features as its undergraduate loan offerings — three options for repayment term lengths, competitive APRs, and a $1,000 loan minimum. 

How Custom Choice student loans compare 

Custom Choice Undergraduate Student Loans offers competitive APRs on both its undergraduate and graduate loans. Here’s how Custom Choice stacks up to the competition:

Custom Choice Logo
Earnest logo
sallie mae logo

Undergraduate APR

Custom Choice Undergraduate Student Loans

Undergraduate APR

Earnest Undergraduate Student Loans

Undergraduate APR

Sallie Mae Undergraduate Student Loans

Graduate APR

Custom Choice Graduate Student Loans

Graduate APR

Earnest Graduate Student Loans

Graduate APR

Sallie Mae Graduate Student Loan

Repayment term lengths

7, 10, or 15 years

Repayment term lengths

5, 7, 10, 12, 15, or 20 years

Repayment term lengths

5, 10, or 15 years

Custom Choice Undergraduate Student Loans Earnest Undergraduate Student Loans

Sallie Mae Undergraduate Student Loans

Earnest offers the most options for repayment term lengths with six, while Custom Choice and Sallie Mae both have three options. However, Sallie Mae determines your repayment term length for you, so another lender will be better if you want to choose your own length.  

Custom Choice has the lowest maximum interest rate on both fixed-rate and variable-rate loans for undergraduates and graduate students — which could mean it’s a good choice if your credit isn’t in the best shape. Earnest offers the lowest minimum interest rates on these types of loans, so if your credit score is excellent, Earnest may be a good choice.

None of the three lenders charge origination fees or prepayment penalties, but Sallie Mae does charge a late fee of 5% of the amount due, capped at $25. 

How Custom Choice student loans work

Custom Choice Undergraduate Student Loans offers both fixed-rate and variable-rate undergraduate and graduate loans. Custom Choice allows you to apply with a cosigner, which may reduce your interest rate and the overall cost of your loan. Loans come with a term length of seven, 10, or 15 years. 

Pursue federal student loan options before considering private student loans, including a Custom Choice loan, as you can often get better terms and protections through the government.

You’ll get a .25% rate discount if you choose to make automatic payments from a checking or savings account. Additionally, Custom Choice offers a 2% reduction on your loan’s principal after you graduate. 

To contact Custom Choice’s customer support, call the lender, send an email, or reach them via physical mail. 

Custom Choice will perform a soft credit inquiry when showing you your rates, which has no impact on your credit score. After you choose your loan options and send in your application, the lender will conduct a hard credit inquiry, giving the company a comprehensive look at your credit history but also potentially dinging your score. 

What options do I have to repay my Custom Choice student loans?

Custom Choice offers several options to repay your loans: deferred, flat, interest-only, and immediate payments. The best repayment plan for you depends on your situation.

Deferred Flat Interest-only Immediate
  • Make no payments while in school or during a six-month grace period

  • Unpaid interest accrues

  • Interest is capitalized at the end of grace period

  • Highest total cost

  • Pay $25 per month while in school and during a six-month grace period
  • Unpaid interest accrues
  • Interest is capitalized at the end of grace period
  • Low in-school payments
  • Pay loan’s interest monthly while in school and during a six-month grace period
  • Higher in-school payments
  • Make payments on the loan’s principal and interest right away
  • Highest in-school payments
  • Lowest total cost

Deferred and flat payments will cost more than interest-only or immediate payments because interest will accrue while you’re in school and during your grace period. This interest will then capitalize, meaning it will be added onto your loan balance after periods of nonpayment, including forbearance, deferment, and after your grace period. This will increase your overall loan principal, and you’ll later pay interest on that higher amount, upping the total cost of your loan. 

Is Custom Choice trustworthy?

The Better Business Bureau, a non-profit organization focused on consumer protection and trust, gives Custom Choice Undergraduate Student Loans an A+ rating. The BBB measures companies by evaluating replies to consumer complaints, truthfulness in advertising, and clarity about business practices. 

You aren’t guaranteed to have a positive relationship with Custom Choice just because the business has a great BBB rating. Ask with your friends and family about their experiences with the lender and read what other customers are saying about the company online. 

Custom Choice hasn’t been involved in any scandals or controversies, so you may be comfortable borrowing from the lender. 

Read the original article on Business Insider

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